URBANA – The Illinois economy continued its slow recovery from the COVID-19 pandemic in December, according to the University of Illinois Flash Index.
The number shows an improvement in the state economy since the Flash Index dropped to a low of 92.8 in May, in the wake of the COVID-19 pandemic. (See an archive of monthly Flash Index readings here).
Economist Fred Giertz, who compiles the Flash Index for the U of I’s Institute of Government and Public Affairs, says Illinois tax receipts — the basis for the Flash Index — have improved a lot from the low they reached last spring.
“Starting in the summer, there were all kinds of predictions about the bottom falling out of the state revenues,” says Giertz. “And they are in fact down, but not nearly as much as people expected.”
But the reading is still several points below the 105.7 reported last February, just before the economy felt the impact of the coronavirus outbreak.
“Given where we were in April of 2020, I think the recovery has been very strong,” says Giertz, referring to a month when the Flash Index read 94.2. “But ‘strong’ is not necessarily getting us back to where we were before.”
Giertz says all three components of the tax receipts used in his analysis (personal income, corporate and sales taxes) were higher in December than a year ago, after adjusting for inflation. But the Flash Index has remained below 100 since last March, which means Illinois’ economy is contracting, not growing.
Giertz believes the quick development of vaccines to fight the coronavirus has played a role in the economy’s partial but strong comeback, by instilling hope that better times are coming.